Dow Jones Forecast :Dow Jones rises with jobless claims, Powell in focus

Congress building
Fiona Cincotta
By :  ,  Senior Market Analyst

US futures

Dow futures +0.29% at 34198

S&P futures +0.25% at 4392

Nasdaq futures +0.11% at 15327

In Europe

FTSE +0.34% at 7443

Dax +0.64% at 15326

  • Jobless claims point to a tougher job market
  • Fed Chair Powell in focus
  • Disney rises after earnings beat forecasts
  • Oil steadies after steep losses this week 

Jobless claims point to a tougher job market

US stocks are pointing to a higher open as investors digest the latest jobless claims figures and look ahead to a speech by Federal Reserve Chan Jerome Powell.

The latest US jobless claims figures added to evidence that the labour market is cooling. Initial jobless claims came in at 217k, slightly below the 218 K forecast, while last week's jobless claims were upwardly revised to 220K.

Continuing claims rose by more than expected to 183k, up from 1812k and ahead of the 1820k forecast. This data suggests that unemployed Americans are finding it harder to find a new job, suggesting that the labour market is cooling.

The data comes after Friday's non-farm payroll report, which was weaker than expected and fueled bets that the Federal Reserve may have reached the end of its rate hiking cycle.

The market may have gotten carried away with itself last week. Fed speakers this week have pushed back on expectations that the Fed is done hiking. Several Fed officials have suggested that another hike remains possible while inflation is sticky and U.S. economic growth resilient.

All eyes are now on Fed chair Jerome Powell, who is due to speak for a second time this week. In his appearance yesterday, Powell didn't touch on monetary policy or the economic outlook; however, he could discuss those matters today. His comments will be watched closely for clues over the future path of interest rates.

Corporate news

Disney is set to rise on the open after Q4 earnings from the entertainment giant beat forecasts. Disney posted EPS of $0.82, higher than the $0.70 per share forecast, on revenue of $21.24 billion, which was slightly below the $21.33 billion forecast. Subscriber growth was stronger than expected totaling 150.2 million subscribers versus 148.15 million expected. In addition to stronger-than-expected subscriber growth, attendance of the California, Hong Kong, and Shanghai theme parks was also strong.

Lyft is set to fall around 1% on the open after the ride-hailing company posted weaker-than-expected bookings and added that the measure could continue to struggle in the current quarter.

Arm is set to fall around 6% after the semiconductor company posted a weaker-than-forecast Q3 sales outlook, citing a large deal that would likely be completed later than expected


Dow Jones forecast – technical analysis

The Dow Jones has extended its recovery from 32320, the October low, rising above the 200 sma and the multi-month falling trendline. This combined with the RSI above 50 keeps buyers optimistic of further gains. Buyers will need to clear resistance at 34150 the October higher to test the 100 sma at 34355, before targeting 35000. Failure to hold above the trendline support could see the price test the 200 sma at 33820.

dow jones forecast chart

FX markets – USD rises, GBP falls

The USD is inching higher ahead of the Federal Reserve chair Jerome Powell's speech later this evening. His comments come after some more hawkish comments from other Federal Reserve policymakers at the start of the week.

EUR/USD falling below the 1.07 level ahead of a speech by ECB president Christine Lagarde later today. Her speech comes after the ECB left interest rates unchanged in the October meeting and hinted that the rate hiking cycle could be over. This week, ECB policymakers have adopted a slightly more hawkish tone, with chief economist Philip Lane suggesting that another rate hike should be left on the table as an option, with inflation still above the 2% target.

GBP/USD is falling against the US dollar but edges higher against the euro after Bank of England policymakers, including chief economist Huw Pill, reiterated the need for policy to remain restrictive. Pills comments come after BOE governor Andrew Bailey said yesterday that it was too early to discuss cutting rates. The market is currently pricing in about 10 basis points of easing as early as May, with more rate cuts expected over the summer.

EUR/USD -0.07% at 1.0698

GBP/USD -0.15% at 1.2267


Oil steadies after steep declines

Oil prices are steadying after steep losses so far this week which saw Brent crude oil fall below $80 a barrel on Thursday.

Oil prices are so far down almost 6% in the third straight weekly decline, extending losses of over 5% from last week.

The sell-off in oil has come amid fading concern that the Israel-Hamas conflict will impact oil supply, which has allowed traders to focus their attention back on oil fundamentals.

Oil trades at its weakest level since mid-July as the demand outlook deteriorates. Weak data from China highlights the fragility of the economic recovery in the world's largest oil importer.

Meanwhile, demand indicators in the US are raising some alarms after US crude oil inventories rose by 11.9 million barrels in the week to November 3rd, which would represent the largest weekly rise since February. Due to a systems upgrade, the EIA has delayed the release of its weekly inventory report until November 15.

WTI crude trades +0.7% at $75.80

Brent trades +0.7% at $80.00

Looking ahead

14:30 Fed Bostic speaks

16:00 Fed Barkin speaks

17:30 ECB Lagarde speaks

19:00 Fed Chair Powell speaks





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